Unsurprisingly, healthcare organizations were most challenged by the onset of COVID-19 in 2020. However, where other industries were greatly challenged by domestic economic conditions, healthcare organizations struggled more with regulatory requirements and staff turnover.
The negative effects of the pandemic were most acute among healthcare organizations—often related to loss of revenue and cancellation of appointments. To cope with the broad impact of COVID, healthcare organizations are rethinking critical business operations such as staffing, remote work and office configuration.
“Leading up to the pandemic, the average hospital and health system operating margins were anemic, their cash positions were eroding, and performance and liquidity in non-expansion states were particularly bleak. Thanks to provider relief funds, many hospitals and health systems are now flush with cash, though declining financial performance persists. Relief funds were a vital shot-in-the-arm for many. For some, however, they may have provided a false sense of security by masking underlying ongoing financial distress.”
– Mark Armstrong, Shareholder, Healthcare Consulting
Healthcare organizations viewed the 2020 election similarly to other industries. More healthcare respondents believe the election will have a negative impact on their business than believe it will have a positive effect, but almost a third of respondents believe the election will have no effect at all on their business.
When asked about the outlook on the economy, healthcare was the industry least optimistic about the US economy. However, the majority of healthcare companies believe they will achieve revenue growth in 2021.
Healthcare organizations were more likely than many industries to increase their hiring over the past 12 months, especially among the high growth cohort. Heading into 2021, healthcare organizations place a high importance on acquiring and retaining talent, which they plan to address by hiring new employees and offering more flexible or remote work arrangements. Investing in technology is a high priority for healthcare organizations but is not quite as important as acquiring and retaining talent. When it comes to technology investment in 2021, healthcare organizations are most interested in business intelligence and analytics.
“Healthcare organizations can see an immediate benefit in FTE productivity by implementing data acquisition and engineering. Pulling together large and disparate types of data from multiple sources into an organized format so that non-technical clinicians and hospital executives can utilize the information in decision making can have an immediate and significant impact on overall FTEs and their ability to focus on the more important tasks.”
– Brad Milner, Senior Director, Healthcare Analytics
In 2021, healthcare organizations are primarily focused on selling existing products. A majority of organizations plan to sell existing products to current or new markets. Fewer healthcare organizations are planning to launch new products in 2021. Healthcare organizations plan to increase their capital spend in 2021. This is especially evident among the high growth group, with an average increase that is more than 15 percentage points higher than the no growth group. The most common targets for increased capital spend are acquiring new locations and upgrading IT services.
“The most common struggle for healthcare CFOs that we see is the challenge of consolidations for multi-entity, multi-location organizations. Healthcare CFOs must contend with the expansion of facilities and service lines across regions and states, varying and changing nature of accounting rules as regulatory frameworks evolve, an emphasis on growing the business through both organic new ventures or by acquiring others, and increasing inter-relationships and inter-company activities between entities within the parent company. Addressing the challenges of consolidation using a single, cloud-based financial system tool can propel your healthcare organization forward.”
– Stacy Schuettler, President, Technology Solutions